Exclusive: Abacus Global CEO Jay Jackson Eyes Billions In AUM, Explains How The Company Plans To Bridge The Valuation Disconnect

• Jackson highlighted the rising origination, new capital flow, and the tailwinds that are helping the firm propel forward.
• He stated that the company is well-positioned to address any uncertainties arising from the current environment.
• The CEO noted that, given the company's efficiency and profitability, raising the guidance was a natural outcome.

Abacus Global Management Inc. (ABL) recently reported an upbeat third quarter, with the results surpassing Wall Street expectations for the tenth consecutive quarter.

Abacus Global reported earnings per share (EPS) of $0.24 in the third quarter (Q3), compared to an estimated EPS of $0.18, according to Stocktwits data. Its revenue stood at $63 million during the quarter, compared to a Street estimate of $50.2 million.

Abacus Global shares were up more than 4% in Monday’s opening trade. Retail sentiment on Stocktwits around the company trended in the ‘extremely bullish’ territory at the time of writing.

Stocktwits caught up with CEO Jay Jackson to understand what drove Abacus Global’s Q3 performance, and what lies ahead for the company.

We would like to start with your thoughts on Q3 performance, as well as the longevity of the product in the Middle East.

We had an incredibly productive Q3. That was our 10th consecutive quarter in a row where we had exceeded earnings expectations related to consensus. So, we're incredibly proud of that. What's interesting about that statistic is that, actually, six of those quarters we beat earnings estimates by over 30%, including Q3, primarily driven by our continued efforts to expand our message and reach new investors and policyholders.

We're seeing our origination tick up. We're also seeing new capital coming into the asset. But most importantly, from a market perspective, I think we've also got some wind at our backs. Specifically, around the premise that people are seeking uncorrelated assets. There's almost a flight to safety and other kinds of assets. And this is an uncorrelated yielding product. And now we're starting to see investors really lean into this asset class. I think that's also helping drive our success right now. And we foresee this continuing.

The company's business is evolving slightly from a niche life settlement player to the broader alternative asset management and wealth management segments. What’s driving this transformation?

I think that was always kind of the natural evolution of our company, which is that we provide a very distinct service initially to policyholders, and that service is helping them monetize or understand the liquidity in their life insurance policy through its current market value.

If the number one fear in retirement is running out of money, wouldn't you like to know how long you're going to be in retirement? Right? So, our underwriting is being applied in multiple ways. But in addition to that, institutional asset management firms, banks, etc., have been looking for this kind of yield.

How do you plan to sustain this momentum?

One, there's a huge amount of excitement around investing in uncorrelated assets. Just look at the price of gold. Gold's what, $4,000 now, right? You could look at alternative assets, whether it's private credit, [they’ve] raised billions. So I think that there's a lot of room to go here, and quite frankly, we're just scratching the surface. Our expectation is that there will be billions and billions of dollars in assets under management with our firm.

We expect people to continue seeking this kind of asset, and don't forget that we're the originator. We're the market maker of that asset. So, they have to come to us, and now they're investing directly.

Amid this evolution, the company announced a dividend and share buyback. How do you strike a balance between distributing capital and reinvesting in the company's future growth?

We felt it was the right time, and the reason was that as we've seen our business evolve, we wanted to reward our shareholders appropriately. If you look at the formula that we put out in our press release, we actually put out a pretty conservative dividend. It's only a little over 20% of our adjusted net income.

We have excess capital to deploy, and we took that excess capital and capitalized our shareholders through our recurring revenues. We think that's the right way to conduct ourselves as an alternative asset manager and should be rewarding our shareholders on an annual basis.

Regarding the disconnect in valuation, what do you think retail investors and institutions are missing out on?

It’s really an education issue, and it's not just institutions; it's retail, it's across the board in understanding that first and foremost, life insurance is an asset. People treat it as something that they never want to use or as a piece of debt. They don't see it, oh, this is just like any other form of private credit. And so that's why that disconnect exists.

That education has to start at the core level, and that takes time. We've spent the last three years doing that, and that message is really starting to resonate.

We're right at the precipice of what I think is a breakout. And it's coming from institutions, which are really starting to get this business, retail investors who are kind of nodding their heads and saying, "Oh, I really do get this now."

What was the driving factor behind raising FY25 net income guidance?

I would say the driving factor for us continuing to increase our guidance is predominantly driven by market forces, in a sense. We are [also] becoming more efficient in our underlying business.

We run an incredibly efficient and profitable business. And so I think when you look at the raise on our guidance, that was a natural outcome.

The average realized gain in Q3 was around 37%, up from 26% in Q2. Is this due to efficiency, or is there another factor driving it? Do you think this is sustainable?

I think it's definitely driven by efficiency, but you'll see it vary quarter to quarter. I mean, if you go back a few more quarters, you'll see that number hover between the 20% to 25% range. And I think that this was an exceptional quarter in Q3, partly driven by our efficiencies, partly driven by market factors.

There's a lot of uncertainty regarding rates, and people are still not sure if there will be a hard landing or a recession. How are you going to tackle this sort of uncertainty going forward?

We're in a great spot for that kind of uncertainty. I mean, consider the asset. We would benefit in two ways. Actually, both sides of our transaction.

One, if you're a policyholder and we're in a recession, and you're seeking liquidity, which means you'll look to places that you may not have considered in the past, such as your life insurance policy, to seek liquidity where you haven't done so before. Originations will more than likely tick up during a recession.

The second piece that investors seek during a recessionary environment, like a volatile market or a pullback, is uncorrelated assets.

What makes you distinct from your competitors, and can you explain the competitive advantage you have?

We're the only public company in our entire industry, and that gives us a significant advantage from both a cost of capital and an efficiency perspective. You know we're always driving our growth, because as a public company, you know you're reporting every quarter, and so being innovative is super important.

The interview has been edited for clarity and length.

ABL stock is down 18% year-to-date and 27% over the past 12 months.

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